Margaret Atkins Munro, EA, has more than 30 years' experience in trusts, estates, family tax, and small businesses. She lectures for the IRS annually at their volunteer tax preparer programs. Kathryn A. Murphy, Esq., is an attorney with more than 20 years' experience administering estates and trusts and preparing estate and gift tax returns.

Introduction 1

About This Book 1

Conventions Used in This Book 2

What You're Not to Read 3

Foolish Assumptions 3

How This Book Is Organized 3

Part 1: Getting Started with Estate and Trust Administration 4

Part 2: Administering an Estate 4

Part 3: Operating a Revocable or Irrevocable Trust 4

Part 4: Paying the Taxes 4

Part 5: The Part of Tens 5

Icons Used in This Book 5

Beyond the Book 6

Where to Go from Here 6

Part 1: Getting Started with Estate and Trust Administration 7

Chapter 1: Operating in a Fiduciary World 9

Identifying the Players 10

Determining an estate's fiduciaries 10

Knowing who the trustees are 11

Lining up your team of advisors 13

Estate of Change: Delving into Estates 13

Altering the status quo 14

Probating an estate 14

Collecting the estate's assets 14

Paying expenses and making distributions 15

Tying up the estate's loose ends 15

Operating a Trust 15

Understanding your duties as trustee 16

Putting assets into trust 16

Putting the trust to work 16

Discovering the purpose of the trust 16

Compiling and organizing trust records 17

Bringing the trust to its conclusion 17

Paying Uncle Sam 17

Compiling the estate tax return 17

Figuring out the income taxes 18

Planning an income tax strategy 18

Whipping together Schedule K-1 18

Chapter 2: Exploring the Ins and Outs of Estates 19

Defining the Estate for Probate Administration Purposes 20

Will Power: Understanding How a Will (Or No Will) Affects an Estate 21

Dying testate 21

Dying intestate 22

Taking a Look at Who Can Inherit 23

Surviving spouse 23

Individuals omitted from the decedent's will (including intentional disinheritance) 25

The other players: Devisees and legatees 26

Heirs-at-law 26

Defining the Estate for Tax Purposes 27

Transfer taxes 27

Other taxes 30

Chapter 3: Identifying Different Types of Trusts 31

Differentiating for Income Taxes: Grantor versus Non-Grantor Trusts 32

Grantor trusts 32

Non-grantor trusts 33

Intentionally defective grantor trusts 33

Creating Trusts during Lifetime and after Death 34

Trusts created during lifetime 34

Trusts created under a last will 35

Grasping Revocable Trusts 35

Still breathing: Living trusts 36

Tackling Totten Trusts 37

Going incognito: Nominee trusts 38

Understanding Irrevocable Trusts 38

Making gifts to an irrevocable trust 39

Getting the maximum tax benefit out of dying: Marital trusts 40

Protecting the estate tax exemption: Credit shelter trusts 44

Grandpa (or Grandma) knows best: Grandchildren's trusts 45

Better safe than sorry: Insurance trusts 45

It's only a name, not a description: Crummey trusts 47

Keeping a finger in the pie: Grantor-retained interest trusts 48

Exploring Charitable Trusts 50

Split-interest charitable trusts 51

Non-operating charitable foundations 52

Owning SubChapter S Shares in Trust 53

Qualified SubChapter S Trusts (QSSTs) 53

Electing Small Business Trusts (ESBTs) 54

Chapter 4: Assembling Your Team Members and Knowing When to Use Them 57

Finding What You Need to Go It Alone 57

Finding an Attorney 59

Knowing where to look 59

Asking the right questions 61

Discussing payment options 62

Finalizing your decision 63

Working with your attorney 63

Hiring a Tax Professional 65

Discovering where to look 65

Discussing payment options 66

Considering Help from Other Pros 66

Determining whether you need an investment advisor 67

Obtaining appraisers where necessary 69

Consulting with other miscellaneous pros 70

Recognizing Malpractice 71

Surveying why malpractice occurs 71

Covering your ass ets 72

Part 2: Administering an Estate 73

Chapter 5: Taking the First Steps after Death 75

Addressing the Immediate Concerns When Someone Dies 76

Honoring anatomical gifts 76

Having an autopsy performed 76

Arranging the Funeral 77

Making important decisions 77

Obtaining copies of the death certificate 82

Understanding How Death Changes Everything about the Decedent's Assets 83

Bank accounts and the need for funds 83

Powers of attorney 84

Locating the Estate-Planning Documents 84

The Last Will and testament (The Will) 84

Trust agreements and amendments 85

Letters of intent 86

Other documents that dispose of property 86

Notifying Those Who Need to Be Notified 86

Creating Calendars and Files 89

Eyeing what kind of calendar to create 89

Setting up a filing system 90

Chapter 6: Navigating the Probate Process 93

Filing the Last Will with the Probate (Or Equivalent) Court 94

Figuring Out Whether Administration Is Necessary 95

Do you need a temporary executor? 95

Do you need a special administrator? 97

Determining domicile 98

Accessing ancillary administration 99

Deciding What Shape Your Probate Procedure Should Take 100

Taking small estate shortcuts 101

Traveling the traditional probate route 103

Taking Important First Steps after Your Appointment 107

Eyeing the Surviving Spouse's Rights and Decisions Regarding Property 109

Exercising rights ahead of the provisions of the will 109

Electing against the will 109

Claiming dower 110

Chapter 7: Marshalling and Liquidating Assets 111

Understanding Why You Need to Determine What the Decedent Owned 112

Observing the Obvious: Big-Ticket Items 113

The bricks and mortar: Real estate 113

Things that move: Cars, boats, and cycles 114

Small (and closely held) businesses 114

Tracking Down All the Other Assets 115

Reading the mail 116

Perusing other personal papers 118

Finding the hiding places 118

Emptying the safe deposit box 119

Sleuthing for digital assets and info 120

Checking over prior tax returns 121

Listing Personal and Household Effects 122

Appraising the Property 123

Tangibles 124

Intangibles 125

Real estate 127

Contacting the Employer about Employee Benefits 127

Locating and Collecting Insurance Proceeds 129

Ascertaining Any Other Death Benefits 130

Preparing and Filing the Probate Inventory 132

Liquidating Assets 132

Selling stocks, bonds, and other securities 133

Disposing of real estate 134

Chapter 8: Paying the Debts, Expenses, Bequests, and Devises from the Estate 135

Determining and Paying Debts of the Decedent and Administration Expenses 136

Finding out how and when to pay claims 136

Prioritizing payment 138

Declaring the estate insolvent 140

Informing Potential Beneficiaries of Their Right to

Consider Disclaimer 140

Segregating and Distributing Specific Property 142

Treading slowly before distributing 142

Making the distributions 143

Considering tangible property 144

Looking at intangible property 144

Fulfilling bequests of specific dollar amounts 145

Dividing Other Personal Property Equitably 146

Basing division on letter of intent 146

Creating a system for heirs to choose 147

Disposing of unwanted personal property 147

Slicing Up the Residue 147

Chapter 9: Closing the Estate 149

Obtaining Tax Closing Letters 149

Acquiring Releases of Lien for Real Estate 150

Paying Final Administration Expenses 151

Making Final Distributions to Residuary Beneficiaries 152

Preparing and Filing Final Estate Income Tax Returns 153

Readying Accounts for Allowance by the Probate Court 153

Using the appropriate form of accounting 154

Following the proper probate procedures 155

Remembering filing fees 158

Appointing a guardian ad litem, if needed 158

Filing a military affidavit, if necessary 158

Notifying the surety 158

Part 3: Operating a Revocable or Irrevocable Trust 159

Chapter 10: Understanding the Trustee's Duties 161

Getting Acquainted with the Trust Instrument 162

Creating a plan based on the trust's terms 162

Identifying the players 163

Reforming the trust 164

Empowering the Trustee 165

Buying and selling assets 165

Determining distributions to beneficiaries 165

Hiring and firing advisors 167

Coloring Inside the Lines: Understanding Fiduciary Duty and Limitations 168

Exercising discretion 168

Obtaining errors and omissions insurance 169

Protecting the Trust's Assets 169

Diversifying the assets 170

Asking for help 170

Preparing and Filing Annual Income Tax Returns and Accounts 171

Chapter 11: Funding the Trust 173

Putting Assets in Trust during Life 173

Signing It Over: Giving the Trust Asset Ownership 174

Cash and securities 175

Privately held stocks, promissory notes, and limited partnership interests 177

Real estate 178

Life insurance policies 180

Personal and household property in trust 183

Rolling Property into Trust after Death 185

Chapter 12: Investing the Trust's Assets and Paying Its...